RWE, TotalEnergies agree long-term green hydrogen supply deal

FRANKFURT (Reuters) -Germany's top utility, RWE, said on Wednesday it has agreed to supply French oil major TotalEnergies with about 30,000 tonnes of green hydrogen a year from 2030, in one of the sector's biggest deals.

The agreement runs until 2044, RWE said, adding it was the biggest amount of carbon-neutral hydrogen ever contracted from a German electrolysis facility.

The deal envisages RWE supplying TotalEnergies' Leuna refinery near Leipzig in eastern Germany, via its 300-megawatt electrolysis plant in Lingen in the west, which is set to start operation in 2027.

No financial terms were disclosed.

"This shows that with the right incentives hydrogen works for customers," RWE CEO Markus Krebber said.

The deal comes amid growing scepticism around green hydrogen projects in Europe, with critics pointing to the massive costs for a future technology at a time when local industry is grappling with high energy prices.

The deal deepens an existing partnership between the two energy majors in the area of offshore wind and helps TotalEnergies reach its goal of decarbonising its European refineries.

Last month, it said it would develop two green hydrogen projects with industrial gases company Air Liquide, aiming to help decarbonise Total's Dutch and Belgian refineries.

When produced with renewable electricity through the electrolysis of water, rather than by stripping it from natural gas and releasing carbon dioxide, hydrogen is a greener fuel, as it leaves only water and oxygen as byproducts when burned.

At Lingen, the RWE Generation unit will use the booked capacity of the hydrogen storage facility in nearby Gronau-Epe for supply to the electrolyser.

An RWE subsidiary, RWE Gas Storage West, plans to begin operation of the facility in 2027.

Transport to Leuna will be provided through Germany's new hydrogen core network, set to start between 2025 and 2032.

(Reporting by Christoph Steitz and Vera Eckert; Editing by Lincoln Feast and Clarence Fernandez)